Original-Research: MLP SE - from NuWays AG

Classification of NuWays AG to MLP SE

Company Name: MLP SE
ISIN: DE0006569908

Reason for the research: Update
Recommendation: Buy
from: 11.07.2024
Target price: EUR 11.50
Last rating change:
Analyst: Henry Wendisch

Another performance fee quarter ahead; chg. est.

Topic: With the end of Q2, two major public funds of MLP's asset manager FERI have surpassed their respective cut-off dates, above their old HWM and benchmarks. As a result, we expect the collection of another € 4.2m performance fees from public funds in Q2, in detail:

Optoflex as main performance fee driver: On June 28th 2024, FERI's second largest public fund (€ 1.3bn AuM) has again surpassed its old HWM from 31st March 2024 while achieving a 1pp outperformance over its hurdle-rate (Euro short-term rate, €STR). As the Optoflex records performance fees on a quarterly basis (vs. yearly at most other funds), we consequently expect a € 3.9m performance fee contribution from the Optoflex in Q2.

Euro Equity Flex with a small contribution: This € 247m large fund records performance fees only on a yearly basis with its cutoff date on June 30th. On this day, the fund recorded a 14.9% performance above its old HWM from June 30th 2023, while its benchmark (EURO STOXX 50 Net Return) recorded a 14.0% performance in the same period. Consequently, 15% of the 0.9pp outperformance is eligible for performance fees which we estimate to be € 0.3m for Q2 (see p. 2).
Potential upside from private equity carries: historically, FERI has collected c. € 1-2m performance fees from its alternative assets in the second quarter (Q2'22: € 1.1m; Q2'23: € 2m). These are discrete events and can not be observed from the outside. Therefore, it remains a blackbox for us, whether private equity carries will be recorded or not in Q2'24e, posing as a potential upside of € 1-2m (see p. 2).

AuM composition dominated by FERI: as of Q1'24, FERI makes up c. 81% of MLP's € 59.3bn AuM base. Here, 1) public funds make up c. € 3.6bn, while the largest parts are 2) alternative assets of c.€ 17.5bn (i.e. hedgefunds, private equity, infrastructure and real estate) and 3) c. € 28bn of 'other assets' which are undisclosed but should be made up of liquid assets/securities for individual investment strategies and white label solutions for institutional clients, in our view (see p. 2).

Against this backdrop, we now incorporate € 4.2m performance fees in our model (prev. € 2m). As our new EBIT estimate of € 90m (old: € 88m) is substantially above the € 75-85m EBIT guidance, a guidance upgrade with Q2 results seems likely. Therefore, we reiterate our BUY recommendation with an unchanged PT of € 11.50, based on FCFY'24e and SOTP.

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http://www.more-ir.de/d/30189.pdf
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